May 7, 2008

 

CBOT Corn Review on Tuesday: Up on weather, outside support

 

 

Chicago Board of Trade corn futures closed higher Tuesday on weather concerns and support from outside markets.

 

May corn closed up 12 3/4 cents to US$5.94 3/4 a bushel, July was up 12 1/4 cents to US$6.06 1/4, and December was up 10 3/4 to US$6.23 1/2.

 

Analysts said farmers aren't at the point where they will start planting in the mud, but the continued wet weather is making them nervous. Corn yields typically decline when the crop isn't planted by mid-May.

 

Traders and some analysts said strength in outside markets also supported corn. In particular, record-high crude oil prices were all traders were talking about earlier in the day, one trader said. Crude oil closed Tuesday above US$120 a barrel for the first time.

 

T-storm Weather Meteorologist Mike Tannura said the U.S. Midwest will continue to see rain systems pass through into the weekend. In the short term, rainfall Tuesday night into Wednesday could drop as much as two inches in southern parts of the Midwest, including Missouri, Illinois, Ohio and Indiana. There will be several chances for light rain throughout the Midwest Thursday and Friday, he added.

 

The intermittent rain is frustrating for farmers anxious to get out into the field, analysts said.

 

"They'd love to get a week of dry weather, then all hell would break loose," said Jack Scoville, an analyst with Price Futures Group.

 

Even with the gloomy forecast, corn prices dropped off from session highs after approaching the limit-up level of 30 cents earlier in the day. A trader said Newedge sold 1,000 corn contracts late in the day, helping push prices lower.

 

Another trader said the market has had a 40-cent range that was "viciously confirmed" during the past two days. Corn prices had dropped more than 15 cents on Monday. He said Tuesday's retreat from session highs was aided by long-range weather forecasts that could point to more planting opportunities.

 

He and other analysts said political criticism of ethanol continues to apply downward pressure.

 

CBOT oats closed higher for the day thanks to fund buying, a floor trader said. He said commercial funds continue to invest in oats as a hedge. July oats were up 9 1/2 cents to US$4.19 1/2 a bushel and September oats were up 10 cents to US$4.31.

 

Ethanol futures finished firmer. June ethanol jumped 3.9 cents to US$2.548 a gallon, and July ethanol rose 2.8 cents to US$2.498.